2025-VIL-39-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Composite Supply, Works Contract, Taxability of Transportation and Insurance Services – Applicant entered into a contract with Power Grid Corporation of India Limited (PGCIL) for setting up HVDC Multi-Terminal System. The entire scope of work was split into five contracts, with the third and fifth contracts involving the applicant directly. The third contract was for onshore supply of goods, while the fifth contract was for providing services including local transportation, insurance, and other incidental services for the goods supplied under the first and third contracts - Whether the supply of services made by the Applicant under the Fifth Contract is composite supply with principal supply of goods under the Third Contract – HELD - The comprehensive activity of the 'Works Contract', which involves construction, fabrication, erection, installation, and commissioning of the immovable property, is to be treated as a supply of 'service' as laid down under clause 6(a) of the Schedule II of the CGST Act, 2017 - the commissioning of terminals and other such installations tantamount to commissioning of immovable property, wherein the property in goods stand transferred to the principal on completion of the respective segment of the project. Therefore, the agreement for setting up the aforesaid project is a composite works contract as defined under Section 2(119) of the CGST Act, 2017 and the same is classifiable under 'Construction Services', falling under SAC 9954, attracting 18% GST as provided under entry Sl.No.3 (xii) of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, as amended vide Notification No.1/2018 - Central Tax (Rate) dated 25.01.2018 – Ordered accordingly - Whether the supply of service of transportation, freight and insurance under the 'Fifth Contract' provided for the goods supplied by the Applicant is in the nature of Business Support Services and shall be chargeable to tax at specified rates – HELD - Since the overall agreement for setting up the project is a composite works contract, the question of examining the applicability of exemption as provided under Sl.No.18 of the Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, as claimed by the applicant, does not arise – Further, there exists no reason to identify the 'principal supply' in the instant transaction, as the overall agreement is a composite works contract.
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